Alabama research council analyzes Jefferson County revenues

A new analysis by the Public Affairs Research Council of Alabama says Jefferson County's per capita revenues -- even after the loss of its occupational tax -- are comparable to revenues of the other three largest counties in Alabama: Mobile, Montgomery and Madison.

The report, written by Executive Director Jim Williams, also says that when Jefferson County still had its 0.5 percent occupational tax, its per capita revenues were substantially higher than revenues for those three peer counties.

Trying to understand Jefferson County finances has been a vexing issue for lawmakers and the public as the county struggles with the loss of its occupational tax and works to resolve its municipal bankruptcy, the largest in U.S. history.

"I think the argument about Jefferson County has been conducted backwards," Williams said on Friday. "Don't start out with the tax, and then say, 'OK, how do I spend it?'

"Instead, plan what you need, and then finance it," Williams said. "Ask first, what services are you trying to deliver, and what are your goals and objectives? Then decide what services should be paid by user fees. And finally decide, what taxes do you need to finance the services that are for the general benefit?"

PARCA, a nonpartisan "good government think tank" based at Samford University, has analyzed local government finances in Alabama for 25 years. For this report, Williams looked at actual audited revenues and expenditures for Alabama's four largest counties for fiscal 2010.

"While meaningful information about county finances in Alabama is hard to come by, there is no shortage of raw numbers," the report says. "The key is to choose the right ones, and to analyze them through 'apples-to-apples' comparisons that get at the real issues in an objective way."

The per capita general fund revenues for fiscal 2010 -- as adjusted by PARCA for its comparison, which also took out the Jefferson County occupational tax -- showed Jefferson County at $270 per resident; Mobile County, $288; Montgomery County, $258; and Madison County, $146.

Jefferson County Commission President David Carrington said Friday he was "disappointed Mr. Williams did not verify the accuracy and completeness of his numbers with the county before publishing."

Jefferson County officials have made massive cuts in county services during the past year and say deeper cuts are necessary because the Alabama Legislature declined to provide a new source of revenue to replace the county's defunct occupational tax.

The PARCA report, however, suggests the county still has revenues available to it that are comparable to those of other large counties in Alabama.

Jefferson County Manager Tony Petelos said he hadn't seen the PARCA report and couldn't comment on it, but did say the county is paying for the "bad practices of previous commissioners."

"The county was bloated, I know that, when you look at some of the functions we provide," Petelos said. "We do have a nursing home we're trying to sell, but HealthSouth has thrown a monkey wrench into that. We have consistently lost money at Cooper Green Hospital, and we have a laundry (which serves the nursing home, jail and hospital) that loses money."

Petelos said Jefferson County will focus on the hospital options this summer, and "the bottom line is we're cutting expenses in the county and we're going to continue to do so."

A May 20 Birmingham News article presented a simpler analysis of the counties' general fund revenues without adjusting for factors that PARCA took into account. Using those figures, Jefferson County, after losing its occupational tax, would appear to have far lower per capita revenues in future years than two peer counties, Mobile and Madison.

But PARCA's report states that its more comprehensive analysis, which used audited revenue figures rather than budget estimates, provides a true apples-to-apples comparison, putting Jefferson County a bit behind Mobile but well ahead of Madison in per capita revenues.

"A budget is a plan or estimate, but it may not represent what actually happens during the year," PARCA wrote. "For example, the FY 2007 Jefferson County budget estimated that the General Fund would receive $356 million in revenues; however, the audit report shows that the General Fund actually took in only $263 million that year."

But basic facts about how Jefferson County revenues compare with those of peer counties are only a first step, the report says.

Questions

Williams ends his report with questions:

What do the revenue comparisons with peer counties suggest about the adequacy of Jefferson County's revenues? Where do we need more money, and where better management of the money we have?

Has anyone looked at how the peer counties conduct business in the various functions that are common to county governments, to see if there are practices worth copying?

Are there processes in place to search for best practices and develop plans that would resolve Jefferson County's serious deficiencies in accounting, financial controls and financial management? Is the county moving to reform its indigent care system to improve cost-effectiveness and quality of care?

"Answers to questions such as these," the report said, "are urgently needed."